Increasing global political, economic and trade tensions are driving down the number of foreign real estate purchases.
Purchases of U.S. homes by foreign buyers have dropped by more than a third in the last year.
And home purchases by Chinese buyers plunged by 56% from 2018 levels, according to a new survey by the National Association of Realtors.
“The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S,” Lawrence Yun, chief economist with the National Association of Realtors said in the new report.
The real estate trade group looked at purchases of properties across the country by offshore buyers and recent immigrants for its annual survey of foreign home investment in the U.S.
California, Florida and Texas are still a top destination for these international homebuyers, the Realtors found.
Home sales to foreign investors dropped in 2019 for the second year in a row. After peaking at more than $150 billion in purchases in 2017, sales fell to $121 billion last year and are now below $80 billion — a drop of almost 50% from the high-point.
“A confluence of many factors — slower economic growth abroad, tighter capital controls in China, a stronger U.S. dollar and a low inventory of homes for sale — contributed to the pullback of foreign buyers,” Yun said. “The decline was so substantial — well beyond that can be explained by economic factors.
“Trade war rhetoric no doubt contributed.”
Yun said that tight home inventories in many states also were a factor in the sales declines.
Even with the U.S. and China at loggerheads over trade and economic issues, Chinese buyers still were the top foreign purchases of U.S. homes with $13.4 billion in acquisitions. That’s down from almost $32 billion in 2017.
Canadian buyers were the second most active with $8 billion in purchases, followed by home acquisitions from India at $6.9 billion.
Mexican buyers accounted for only $2.3 billion in U.S. home buys. With increasing friction over immigration and trade, property purchases across the country by Mexicans have dropped from a record $9.3 billion in 2017.
In Texas, the largest number of international home purchases were by Indian and Mexican buyers, the Realtors found.
Foreign buyers across the U.S. purchased homes with a median price of $280,600 — higher than the overall median cost of about $260,000.
More than 40% of the property purchases by foreign buyers were all-cash deals.
And almost half of the buyers said they were making the acquisition for their primary residence.